Land O Lakes, FL

Turn on any financial news program and at some point you’ll hear the experts extolling the virtues of diversification. Real estate, even through the market downturn, has long been considered a conservative, long-term strategy to growing wealth.

In fact, that very downturn has created a historic buying opportunity for potential homebuyers and investors alike. The combination of lower home prices across American and historically low mortgage rates, two essential factors that usually don’t trend in the same direction, have triggered a buyer’s market in many areas of the country. For real estate investors who want to rent their properties, this can make the difference in achieving positive cash flow sooner or right off the bat.

While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.

· Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment’s notice. It could take days or months to sell a property, depending on the strength of the market in a particular region.

· Consider cash flow. You’ll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants.

· Start small. Look into buying a condominium, single-family home or a duplex. Leave large apartment buildings and commercial properties to the pros.

· Inquire at the local Chamber of Commerce about companies relocating into or out of the area. Company movement is one indicator of demand for rental and/or office space.

· Find a property that will be in demand. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage that sits on a quiet street.

· Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land. Ask a local real estate professional about the area, its history, and how fast (or slow) properties are moving.

· Inspect the home you’re considering for signs of water damage, such as stains on the ceiling and crinkling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away your cash flow. Because even the best inspection can’t always predict problems, try to set aside some of the rental income for unexpected repairs.

· Spend time driving the streets of the neighborhood noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?

· Be ready to make fixes quickly and respond to the renter’s needs. If you’re not prepared to be a hands-on landlord, consider hiring a property management firm.

· See your tax advisor for related planning and laws that can affect your investment decisions.

Remember, investing in a property is much different than living in one, and emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.

The theory behind short sales seems simple enough: If a homeowner owes more money on a house than the house can sell for, and the homeowner is struggling to pay the mortgage, the lender will allow the house to be sold for less than is owed.

For obvious reasons, lenders are not big fans of short sales and often make it a complicated process.

In April 2010, The Home Affordable Alternatives Program (HAFA) released new guidelines designed to streamline the short-sale process and allow more delinquent homeowners to sell their homes and move on with their lives.

In its first year, participating servicers initiated 12,266 HAFA agreements and completed 5,447 transactions.

According to the National Association of Realtors, the share of distressed homes—bank-owned properties and pre-foreclosure short sales— in April 2011 dropped to 37% of total sales volume, down from 40% in March and an average of 39% over the first quarter.

HAFA complements the Home Affordable Modification Program (HAMP), a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments by providing alternatives for borrowers who don’t qualify for or don’t complete a trial modification.

“[HAFA short-sale guidelines] are designed to help people who are unable to keep their home under the HAMP loan modification program,” said Jeff Lischer, managing director for regulatory policy for The National Association of Realtors. “Let’s say you can’t keep your property under HAMP, the next step is a short sale, which is better than a foreclosure.”

It’s estimated that lenders lose about 40% of a property’s value on a foreclosure, whereas the figure is reduced to about 19% on a short sale. Moreover, the short sale is a graceful exit from the ownership, which is better for people’s credit scores.

New rules also add incentives for the short-sale process. One incentive helps sellers relocate by providing them with $3,000 for moving expenses. A second incentive is for mortgage servicers, who receive $1,500 from the federal government for each completed short sale. Under new guidelines, homeowners can secure a short sale approval in advance from the bank representing a minimum net amount the bank will accept.

Lenders participating in the HAFA program maintain the following requirements for homeowners considering short sale: The loan must be less than $729,750, made before Jan. 1, 2009, and the home must be the owner’s primary residence. Also, the homeowner must be delinquent and unable to pay the mortgage, and the homeowner’s mortgage payment must be more than 31% of his or her before-tax income.

One of the most in-demand requests that real estate agents are getting from those looking for new homes concerns home theaters, or at least the space to add such a multi-media room.

With home-theater technology evolving and prices lowering over the last decade, the concept has evolved from luxury to near necessity for many households. It’s the place where the family comes together to be entertained, and is the most occupied room in the house after the kitchen and family room. It’s become the focal point for entertaining and showcasing expansive, crystal clear flatscreens and impressive components. It’s why many homebuyers are looking for houses with home-theater spaces or extra rooms to create one.

Real estate experts agree that home theatres add value to a home. According to the Home Builders Association, most new homes with a $250,000-plus price come with a home theater or media room.

“Home theater is a way for the homeowner to bring all these cool new pieces of technology together and fit them seamlessly into their lifestyle,” said David Start, vice president of Sacramento, Calif.-based theater-furniture manufacturer California House. “You have Apple, Netflix and now Amazon—all these big tech companies with really fantastic products. Home theater allows you to integrate these products into the way you live.”

There are several ways one can make the home theatre room more appealing prior to showing a home.

Start by cleaning all surfaces, keeping wiring as discrete as possible and storing electronics that may look sloppy due to wires or size. Also, although having lots of seating space is practical in a media room, it may be a good thing to reduce the number of sofas to give a spacious look to the room.

“I think a media room does add value, however, it is truly a personal preference based upon what the buyer wants and/or is looking for in a home,” said Teresa Cwik of Showcase Staging Houston, Houston, Texas. “I have seen a lot of these rooms staged and in my professional opinion I believe the room should be staged with appropriate media room furniture, such as theater seating.”

There are a number of smart furniture choices to make the room look better and create the movie environment that so many desire.

“Customers are looking for furniture that will present their TV in style while concealing many of the other components—DVDs, gaming consoles, speakers—neatly out of sight,” explained David Adams, marketing director for home-theater furniture manufacturer BDI of Chantilly, Va. “Unique features that are integrated into better home theater furniture include hidden wheels, flow-through ventilation, adjustable shelves, built-in media or speaker storage, and integrated cable management systems.”

Indeed, we’re in the golden age of gadgets and components. Rooms focused on technology can be just as appealing to today’s home buyer as a large bathroom or walk-in closet.

Today’s home buyers are often thinking about a home’s technology advantages as much as they are its floorplan, square footage and location.

A recent survey by the Consumer Electronics Association of real estate agents showed that home-theater systems, home security systems, home automation management systems and energy management systems are selling faster than they ever have.

“There is a strong relationship between home technologies and the real estate market,” said CEA’s Rhonda Daniel in a recent press release. “While the market needs to recover before home technologies play a more important role in home sales, the industry can help prepare real estate agents to be comfortable in discussing these types of systems with their clients.”

According to the survey, the number of real estate agents who have been involved in buying, selling or showing a plugged-in home equipped with technology has risen greatly during the last two years. Those showing established systems such as monitored security were calculated at 93%; home theater or home theater-wired systems were 89%; home automation and management systems were 54%; and energy-management systems were 51%.

The survey also shows that 68% of REALTORS^® believe home technologies will play a more important role in the success of home sales within five years.“Manufacturers and electronic systems contractors should be laying the ground work now to take advantage of the eventual upswing in the real estate market,” Daniel said. “Educating rREALTORS^® on the benefits, value and functionalities of installed technologies now will demonstrate that the CE industry can be a trusted partner to equip them with knowledge.”

Nearly two-thirds of real estate agents surveyed offered that their clients are excited to see technologies in homes. That means current homeowners looking to sell should consider upgrading their home with some sort of home technology system.

“The ideal goal for the consumer electronics industry is to have knowledgeable real estate agents who are excited and open to promoting technology as a selling feature of homes,” Daniel said.

A less expensive way to appeal to technology enthusiasts is to simply make sure there are enough outlets, cable lines and phone jacks at the ready so that someone coming with their own equipment will have an easy time installing them. A home with only one outlet in the family room or media room and no place for a fiberoptic line to be added can be a turnoff.

Thinking of the future may help you sell your home faster in the present.

With winter weather gripping most of the country the fireplace takes on greater importance in the sale of a home.

The National Association of REALTORS^® recently conducted a survey that found nearly two-thirds of homebuyers had a fireplace on their wish list. The fireplace has become a coveted amenity and homes boasting this feature see its benefits during resale.“The fireplace is a focal point when people come to see your home,” said Hillary Staats, an interior designer for Sanctuary on Church in Vienna, Va.

That’s why it’s important to make sure that the look of your fireplace has been updated and is working properly. An older looking fireplace that seems an eye-sore can be easily updated.

“There is a lot you can do to enhance the fireplace before a sale. A lot of times, if it has older brick, I will re-stone a fireplace. Other times it could be as simple as changing mantels, adding a fancier screen or placing a beautiful piece of art above it.”

Transformation materials that are inexpensive and easy to work with are tile, manufactured stone, granite, marble and wood. Sometimes even painting over old, ugly brick will make a huge improvement.

“A masonry fireplace can really set a home apart from the rest and significantly improve resale value,” said Larry Kett, owner of Kett’s Hearth and Home in Grand Rapids, Mich. “Adding a mantel also helps. An engaging fireplace and mantel can provide grandeur for an otherwise ho-hum room.”

Keeping the mantel clean and uncluttered is also a must. “You want the fireplace to look inviting but not cluttered, so keep the mantel clear of all photos and knickknacks,” Staats said. “It’s fine to decorate with accessories, but they shouldn’t distract from the fireplace itself.”

If you want to add a fireplace to improve your home’s resale value, consider an electric fireplace as it’s often the least expensive option and reasonably easy to install.

Gas fireplaces are more common today and easy to use, plus they can be installed just about anywhere. There is no need for a chimney, wood or even matches with this type of fireplace and there is no mess to clean up either. Ceramic log kits are efficient and look like the real deal, without ashes to clean up.

Finally, regardless of the season, a fireplace should be kept clean and in

working order. “You want your buyer to go home feeling really great about that

room and knowing they can move in and sit in front of that wonderful fireplace and

hearth,” Staats said. “There are few things as warm and inviting as a burning fire

on a wintry day.”